Otelco to make presentations this week in $138.5 million income securities offering

By Paul A. Harris

St. Louis, Dec. 6 - Otelco Inc. (formerly Rural LEC) is making early-week presentations of its $138.5 million (8.56 million share) public offering of Income Deposit Securities (IDS) in Toronto and New York City, according to a market source.

The IPO could price during the present week, the source added.

The IDS are comprised of class A shares of common stock and $65.1 million of senior subordinated notes due 2019.

The estimated price range is between $15.20 and $16.80 per IDS.

The offering size is $138.5 million, at the midpoint of the range. There is also a 10% over-allotment option.

The anticipated yield is 10% to 11%. The annual distribution is estimated to be $1.68 per share.

The company will also make a separate $8.5 million offering of senior subordinated notes due 2019.

CIBC World Markets, RBC Capital Markets and UBS Investment Bank are leading the deal. The co-managers are Deutsche Bank Securities, Harris Nesbitt, KeyBanc Capital Markets and Raymond James.

Proceeds will be used to repay $81.2 million of long-term notes and $18 million of Mid-Missouri Holding long-term notes and for general corporate purposes.

Otelco, formerly Rural LEC, is an Oneonta, Ala., provider of telephone services in Alabama and Missouri.

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